John Freeman Working Papers
The Economic Origins of Democracy Reconsidered (with Dennis Quinn)
ABSTRACT:
The effects of the economic changes sparked by globalization on democracy and autocracy have been the subject of much research. We review the prevailing arguments about the links between financial integration, inequality, and democratization, focusing on the contributions of Acemoglu and Robinson (2006), Boix (2003), and Eichengreen and Leblang (2008). In contrast to Acemoglu and Robinson and Boix, we argue that financial globalization both increases income inequality and encourages capital taxation. As a result, financial globalization creates a “U” shape relationship between inequality and democratization. Countries with lower and higher levels of income inequality are more not less likely to democratize. We then subject our theory to a rigorous test. Our design employs the most current and reliable income inequality and financial globalization measures available. Our estimators essentially are the same as those used by Acemoglu, Johnson, Robinson, Yared (2008). We find no support for Acemoglu and Robinson’s (2006) main causal claims. Rather than the hump-shape they predict (or the declining linear relationship in Boix), we confirm that, once financial openness is taken into account, there is a U-shaped pattern between these inequality and democratization. We also find little support for the claim that financial globalization promotes democracy either directly or indirectly. In fact, contrary to Acemoglu and Robinson and Eichengreen and Leblang (2008), we find that more inward capital account openness produces lower levels of democratization.
Available in PDF Format: Paper Text
Idealistic and Realistic Democratic Evaluation Mechanisms in an Open Economy (with Thomas Sattler and Patrick Brandt)
ABSTRACT:
We argue that in the complex environment of open economies with multiple policymaking
institutions, citizens make systematic attribution errors when evaluating government performance. Our analysis of Great Britain, a critical case study for a widely accepted idealistic
democratic evaluation mechanism, shows that citizens evaluations of governments are based
on beliefs rather than evidence of the impact of economic, and particularly fiscal policy. These
findings support a realistic democratic evaluation mechanism taking into account that citizens
draw incorrect conclusions about the competency of policymakers. This is because the public
does not adequately consider the constraints and complex processes in open economies.
Available in PDF Format: Paper Text
Modeling Macro-Political Dynamics (with Patrick Brandt; forthcoming Political Analysis 2009)
ABSTRACT:
Analyzing macro-political processes is complicated by four interre
lated problems: model scale, endogeneity, persistence, and specification uncertainty. These problems are endemic in the study of political economy, public opinion, international relations, and other kinds
of macro-political research. We show how a Bayesian structural time
series approach addresses them. Our illustration is a structurally
identified, nine equation model of the U.S. political-economic system. It combines key features of Erikson, MacKuen and Stimson’s
(2002) model of the American macropolity with those of a leading
macroeconomic model of U.S. (Sims and Zha 1998 and Leeper, Sims,
and Zha 1996). This Bayesian structural model, with a loosely in
formed prior, yields the best performance in terms of model fit and
dynamics. This model 1) confirms existing results about the counter-cyclical nature of monetary policy (Williams 1990) 2) reveals informational sources of approval dynamics: innovations in information
variables affect consumer sentiment and approval and the impacts on
consumer sentiment feed-forward into subsequent approval changes,
3) finds that the real economy does not have any ma jor impacts
on key macropolity variables and 4) concludes, contrary to EMS
(2002), that macropartisanship does not depend on the evolution of
the real economy in the short or medium term and only very weakly
on informational variables in the long term.
Available in PDF Format: Paper Text
Real Time, Time Series Forecasting of Political Conflict (with Patrick Brandt and Philip Schrodt)
We propose a framework for forecasting and analyzing regional and international conflicts in real time. The proposed framework would generate forecasts that 1) are accurate, 2) are produced in (near) real time, 3) address the actions of multiple actors in a conflict, 4) incorporate prior beliefs about conflict processes, and 5) allow us to generate policy contingent forecasts. We propose to meet these desiderata by combining the CAMEO event coding framework with Bayesian vector autoregression (BVAR) and Markov-switching Bayesian vector autoregression (MS-BVAR) forecasting models. We outline an example using these methods and present some preliminary conclusions.
Available in PDF Format: Preface Text
"Democracy and Markets in the Twenty-First Century: An Agenda"
To appear in Democracy and Markets in the Twenty-First Century volume 1. Peter Nardulli Editor
ABSTRACT:
The direction of economic change in the early twenty-first century is clear. Thousands of state-owned firms are being privatized. Existing markets are being liberalized. Scores of financial and other kinds of markets are being created across the world. These new markets increasingly are connected in space and time with existing markets. At the same time, political authority is "migrating." But the direction of this migration is unclear. More important, the impact of authority migration on democracy is uncertain. There is evidence that, in the minds of citizens in some first wave democracies, political migration is having a negative impact on democracy.
The compatibility of economic globalization and democracy hinges on the answers to five related questions. Political economists purport to answer two of them. Unfortunately, the research designs they use for these purposes are seriously flawed. Political economists paper over or ignore the other three questions.
The first part of this paper critiques the existing literature. In so doing, it illuminates the key questions about economic globalization and democracy. The second part calls for six interrelated research projects. More generally, part two explains that, to determine if globalization and democracy are compatible, we need to establish an idea expert democracy applied to monetary technocracy both at the levels of national and supranational government, and show that citizens not only have a conception of government capacity vis-a-vis global market constraints but also that citizens are content with the consequences of adhering to these constraints.
Available in PDF Format: Paper Text
Preface to the Spanish Edition of Democracy and Markets: The Politics of Mixed Economies
Editorial Almuzara plans to publish a Spanish language version of Democracy and Markets. This new Preface was written for this Spanish language version.
Available in PDF Format: Preface Text
"The Electoral Information Hypothesis Revisited," with Jude Hayes and Helmut Stix.
ABSTRACT:
The connection between political and bond market equilibration is studied. The conventional wisdom on the subject, the Electoral Information Hypothesis (EIH; Cohen 1993, Alesina, Roubini and Cohen 1997), is criticized on theoretical and empirical grounds. Using a framework proposed by Garrett and Lange (1995) and data from three of the most developed bond markets in the world a revised hypothesis is constructed and tested. The revised hypothesis recognizes the way formal political and bureaucratic institutions mitigate the effects of democratic politics on bond markets as well as the "fat tailed" distributions and volatility clustering commonly found in financial time series. The results show that empirical support for the revised EIH extends beyond the American case, but this support is not universal. More specifically, where democracy is of the majoritarian type and central banks are weak (the U.K. until recently) the revised EIH holds. Once placed on sounder statistical footings, the U.S. case-one of mixed majoritarian and consensual democracy and a moderately strong central bank-also supports the revised EIH. However, the revised EIH does not receive support in Germany, which has a consensual form of democracy and a strong central bank. The empirical power of the revised EIH thus is shown to vary by institutional context.
Available in PDF Format: Paper Text
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